In general, zakat is calculated on personal net worth, excluding properties and items for personal, family, and commercial use. Public properties are also non-zakatable. Below is a partial list of wealth that is zakat-exempt:

Residence: The domicile owned and occupied by the owner, including furnishings, utensils, and apparatus used for basic needs and necessity

Transportation: The means of personal and family transport, such as vehicles used by an owner and family members

Domestic Animals and Poultry: If used for household food and needs, one may own kinds and quantities in this category as follows (Note: the following numbers of animals for personal use and consumption are based on one zakat payer. If more than one zakat payer domicile together, or keep their animals and land collectively, the numbers would increase accordingly):

Pets including horses, dogs, cats and other household animals: Unlimited

Tools: Devices, instruments and equipment used in one’s personal business

Agricultural Land: The land itself, animals and equipment used in cultivation

Property in Public Trust: Properties used for mosques, schools, hospitals, orphanages and other public service; those designated as charitable endowments (waqf) for the benefit of the needy, and the funds generated from such properties are all non-zakatable (Fiqh az-Zakât, 338).

Unlawful Wealth: Only lawful assets are worthy of the blessing of zakat. Zakat cannot be calculated on prohibited or unlawful wealth, such as interest income, stolen property, or wealth acquired or earned through unlawful means, such as extortion, forgery, bribery, cheating or holding a monopoly. Such wealth must be returned in full to its lawful owners. If that is impossible, it is to be given away to the poor in its entirety (Fiqh az-Zakât, 72).

Zakat is paid to deserving individuals who come under one or more of eight zakatable categories designated by God in the Quran.

Indeed, [prescribed] charitable offerings are only [to be given] to the poor and the indigent, and to those who work on [administering] it, and to those whose hearts are to be reconciled, and to [free] those in bondage, and to the debt-ridden, and for the cause of God, and to the wayfarer. [This is] an obligation from God. And God is all-knowing, all-wise. – Al-Tawbah, 9:60

The Quran specifies how zakat is to be distributed precisely, but grants Muslims maximum flexibility in its collection. On one hand, this guarantees the right of the needful. On the other, it accommodates inevitable changes and variation in stores of wealth, effective distribution mechanisms, and diverse societies through time and in different places in the world. Trustworthy Muslim institutions collect and distribute zakat to the deserving they identify as belonging to one or more of the zakatable categories prescribed in the Quran.

It is noteworthy that Allah, Himself, identified for zakat payers and administrators the eight human categories of zakat disbursement—leaving this neither to ruler, nor to scholar, nor to the Prophet himself. It is reported that a man once came to the Prophet and asked him zakat. The Prophet said:

Allah permitted not even a prophet to adjudge zakat-[worthiness]. Rather, He Himself ruled on it and permitted it in eight cases. Therefore, if you belong to any of these, I shall most surely give you your right. – Abû Dâ’ûd

The eight categories of eligible zakat recipients are as follows:

The poor (al-fuqarâ’), meaning low-income or indigent

The needy (al-masâkîn), meaning someone who is in difficulty

Zakat administrators

Those whose hearts are to be reconciled, meaning new Muslims and the larger community

Those in bondage (slaves and captives)

The debt-ridden

In the cause of God

The wayfarer, meaning those who are stranded or traveling with few resources

As a general rule, charities are a sacred trust (amânah) to be spent according to the giver’s wishes, provided they are in accordance with the injunctions of the Quran and the specifications of the Prophet.

Islam enjoins administrators of charity—including zakat— to honor the legitimate purposes intended by its payers for the charity they have vouchsafed them. Whether an individual, organization, or government agency, Islam considers the appointed executor of zakat and sadaqa charity a temporary trustee (wakîl) over all such funds. The funds are deemed “restricted” or “designated,” and the trustee is constrained by Divine Law (Sharî‘ah) to disburse as intended by its giver.

The trustee is no more than a conduit between payer and recipient, empowered only to act as intermediary. The trustee’s agency powers expand only if the payer of zakat or sadaqa imparts his or her payment to the trustee with no further designation than identifying it as either zakat or sadaqa. In this case, the trustee can disburse such unrestricted zakat or sadaqa as is deemed best in accordance with the limitations set by the Quran and defined by the Prophet.

If a charitable organization accepting zakat cannot execute a zakat payer’s request (or that of any charitable donor) it must either contact the payer and receive approval for another legitimate zakat use, turn the zakat payment over to another charity that can execute the payer’s request (with the payer’s consent), or return the payment to the payer, notifying him or her of its limitations.

As a general rule, Zakat must be disbursed in the area where it is collected. The poor and needy of a locality where zakat is collected have priority over all others as recipients. (Fiqh az-Zakat, 515; for exceptions to this, see next question).
Local distribution of zakat from a community’s wealthy to its poor is the Sunnah of the Prophet and, consequently, paramount.

The Prophet œ established this precedent with Mu’âdh ibn Jabal in Yemen in unmistakable language. Mu’âdh himself divided Yemen into local regions and had zakat collected and distributed from the wealthy of those internal localities to the poor of the same place of collection. Many other verified accounts from the Companions confirm this practice.

Indeed, the principle of local collection and distribution has been the established practice implemented by every succeeding Muslim generation, and endorsed by all the scholars. To take zakat out of a locality and give it in another place without extenuating circumstances when need still remains in the original locality is a serious violation of zakat. Nor can this obstacle be easily overcome.

In a well-known case, ‘Umar ibn Al-Khattâb was queried about the zakat of the Bedouins, a nomadic people. He replied, “By Allah! I shall render sadaqa (here, meaning zakat) to them until each one of them becomes the owner of 100 camels, male or female” (Al-Musannaf, 3:205). That is to say, each one of them would become wealthy before removing the zakat of the Bedouins, who were generally very poor, from their locality.

This prevention is particularly strong when it comes to in-kind zakat such as livestock or crops. Scholars differ on where to pay zakat if one’s zakat is monetary and earned in one place, while its payer lives in another. Most scholars consider it payable in the place where the payer resides, rather than where it was earned (Fiqh az-Zakat, 511).

No. When local need is sufficed and zakat funds remain in the repository, it is permissible to move that surplus from a locality to a central zakat bayt al-mal (zakat treasury) for disbursement. No such entity exists in North America yet.

In addition, legitimate authorities in Muslim polities can transport zakat as they see fit for the greater good of all. Barring this action, Shaykh Yusuf Qardawi argues, the Muslim individual inherits that authority in the case of his or her own zakat payment: “Individual payers can…decide whether to transport due zakat to needy relatives, to people who are in dire need, for essential public interests of Muslims, or to a pivotal Islamic project in another country.” (Fiqh az-Zakat, 517). He states, as well, that the zakat agency must not transport all the collected zakat unless there is no local need at all for zakat funds (Fiqh az-Zakat, 517).

Other stipulations permit removal of some zakat funds outside the community. If Muslims of one community are affluent and without essential need, or if there is an overwhelmingly urgent need elsewhere such as extreme poverty, life-threatening displacement or catastrophic natural disasters, then a portion of zakat from one community must be moved to another, even if distant. Muslims are brothers one to another, and they are like one body. We cannot look away from Muslims anywhere in need—even if this should mean that we sacrifice some of our own need for the sake of solidarity, and to relieve the suffering of other Muslims.

Evidence indicates that the Prophet endorsed these exceptions. Imam Mâlik said: “It is not permitted to move zakat [from one locality to another] unless its need is more urgent in another locality” (Al-Amwâl, 595). The practice seems clear that a locality’s poor and needy should be sufficed, and, in the case of dire need, a portion of zakat can and should be transported to help the desperate (Fiqh az-Zakat, 515-17).

Resource: The Idea of Philanthropy in Muslim Contexts by Jon B. Alterman and Shireen Hunter (The Center for Strategic and International Studies; February 22, 2004).

Zakat is obligatory, not optional; it is worship, not a tax. No matter the country one lives in, and whether one’s taxes increase or decrease, there is no substitute for paying zakat. Zakat is a permanent and continuous Pillar of Islam. No tax can ever replace it. No circumstance can ever preclude its payment whenever it comes due. God, Himself, has made the giving of zakat to the needy and entitled a sign of loyalty to Him.

Governments may forgive unpaid taxes, but none can absolve one of due zakat payments—no matter how far back they accumulate—for zakat is other people’s money.

Muslim scholars, such as the 11th century Andalusian polymath Ibn Hazm, have said that one who has failed to pay zakat shall have one’s due zakat calculated at its set percentage rate and then multiplied by the years it was not paid—even if this consumes all of one’s wealth. Other scholars hold that nonpayment of zakat forfeits one’s right to transact business. Moreover, if a transaction stipulates that a portion of profits shall inure to the benefit of a zakat fund, nonpayment of that fund nullifies the contract.

Zakat is a solemn obligation. The moment it falls due upon one’s wealth, that portion no longer belongs to the wealth-holder. The poor and eligible automatically become its rightful owners. Let no believing man or woman feel content with the wealth God has granted them until they have duly distributed the zakat due on it to the poor and needy, who are its lawful trustees in the sight of God.